RE:Good set up for 2023JohnJBond wrote: The general view of 2023 is that oil prices get expensive in the second half
How expensive? Doesn't matter $100+
The reasons are simple - global recovery from Covid economic disruption - ie return of Chinese demand plus others that don't need to be discussed here
How does OBE position itself to gain maximum share value?
Maximize production available for sale in 2023 H2
How do they do that?
Spend as much as they can drilling in Q1/23. Ie spend as much on Capex in Q1/23 as they did in Q1/22 and Q4/23. That being about $100 million
This seems to be exactly what that are doing right now in Q1/23
Q2/23 is break up. About the only wells they can drill in Q2 are Viking. Chances are they will double up what they did last Q2 and spend about $20 million on Viking drillling. Putting total Q2/23 capex around $50 million
That sets them up to enter the second half of this year with the highest possible production at the time of highest oil prices
Q2/23 is the cash cow quarter. Cash tends to pile up because of the prior months of drilling and relatively low cap ex
We don't know what oil prices will average in Q1 and Q2. But even at current prices they should still have sufficient free cash flow in H1/23 to achieve their $225 debt target and buy back 10% of their shares
After that free cash flow will likely be divided between dividends and internal purposes. Somewhere between 50/50 and 75/25 (the latter seems to be the comparable norm)
That looks like a winning strategy to me
You can crunch your own numbers to see what the free cash flow looks like in H2/23 with 37-38,000 boe/day and $100, $110, $120, $130, $140, $150 etc WTI
At the higher end the annualized dividend could exceed the current share price.
Merry Christmas (2023)
Ok thx. Have you crunched the numbers with oil at $70. $60, $50??? I do believe the sp will be significantly higher in 2023 BUT so far over the last 6 months , it has been a disaster for energy stocks. Here's hoping you are right ;)